When it comes to taking out a loan for a home purchase, there are several questions that you should be prepared to ask. Since many homebuyers are first time buyers, however, most people do not know to ask anything beyond how much the interest rate will be and how much the monthly payments will be. In reality, there are several other things you should ask about and even insist upon before you take on a loan from a lender. Here’s a look at a few questions you should ask that could potentially save you hundreds or even thousands of dollars.
Will You Guarantee Your GFE?
The GFE, or Good Faith Estimate, is an estimate that the lender makes regarding the cost of the fees and other expenses associated with taking out your mortgage loan. Although lenders are required to provide a GFE to mortgage loan borrowers, they are not required to guarantee that number. As such, the estimate really doesn’t have much meaning behind it. Therefore, in order to make certain you are not mislead about these fees, you should ask the lender to put a guarantee on this estimate. If the lender refuses to stand behind its GFE, it is probably in your best interest to choose a different lender.
Does the Loan Include a Prepayment Penalty?
Many people don’t realize that mortgage loans commonly include a prepayment penalty. This means you will be assessed a few if you choose to pay your loan off early. While some states do not allow lenders to assess prepayment penalties, it is always in your best interest to ask. If the lender does charge a prepayment fee, ask the terms of the penalty. With some lenders, for example, you only have to pay the fee if you pay off the loan within the first two to five years. Regardless of the terms, you should also be sure to ask how much the penalty will be as well as whether or not the penalty will be assessed if you choose to refinance your loan at a later date.
What is the Yield Spread Premium?
If you are negotiating your loan terms through a lender representative, part of your terms may include paying a yield spread premium, or YSP. The YSP, which is the amount of money the representative receives as a commission, will be disclosed in your settlement statement. If you are unhappy with the amount of the YSP, you should negotiate this fee upfront rather than waiting until closing time.
Can You Approve Your Loans In-House
Before your mortgage loan is approved, it is sent to a professional known as an underwriter. The underwriter is responsible for reviewing your file and approving or rejecting the loan, as well as determining the conditions of the loan. Lenders with in house underwriters will be able to process your loan much ore quickly than those who farm the job out to contractors. Whether the underwriting is performed in house or not, you need to coordinate the approval date with the lender so you can set up a closing date for finalizing your loan.
Ryan Lynch is part of the top notch marketing team for an Austin
mortgage lender and a group of Austin Realtors that proudly serve the
capitol city. Their office is conveniently
located in West Austin and they are ready to help.
Distributed by http://www.ContentCrooner.com
